Social Stock Exchange in Singapore

http://www.csrdigest.com/2010/12/new-exchange-for-social-enterprises/

New Exchange for Social Enterprises

December 10, 2010 by admin  
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Impact Investment Exchange Asia (IIX) recently came into being in Singapore to provide social enterprises in Asia with greater access to capital. The CSR Digest got the Exchange's Managing Director, Robert Kraybill, to respond to a few questions about this new initiative.

Impact Investment Exchange Asia (IIX) recently came into being in Singapore. Its mission? To provide social enterprises in Asia with greater access to capital, allowing them to more rapidly expand the impact of their activities.

Robert Kraybill

The CSR Digest managed to get the Exchange’s Managing Director, Robert Kraybill, to respond to a few questions about this new initiative.
Robert is a senior finance executive with two decades of experience in the capital markets as an investment banker and a private equity investor. Robert holds a BA from Princeton University, magna cum laude, and a JD from the University of Pennsylvania School of Law, summa cum laude.
CSRD: What was the impetus for the founding of Impact Investment Exchange Asia (IIX)?
RK: The mission of Impact Investment Exchange Asia (IIX) is to provide Social Enterprises in Asia with greater access to capital, allowing them to more rapidly expand the impact of their activities.
The impetus for the creation of the exchange came from the experiences of our founder, Durreen Shahnaz, in raising capital for the first social enterprise she founded 10 years ago, oneNest. This experience demonstrated the importance (and difficulty) for social enterprises of connecting with impact investors, i.e., investors who care about the social mission of the enterprise as well as its financial return. Years later, when Durreen became a professor of social entrepreneurship and head of the Programme on Social Innovation and Change at the Lee Kuan Yew School of Public Policy at the National Univ. of Singapore, she focused her research and writing on this issue, focusing on the possibility of creating a social stock exchange. Eventually, she caught the attention of the Rockefeller Foundation which offered to back her in her efforts to start such an exchange.
CSRD: How has the reaction been to Impact Investment Exchange Asia so far?
RK: The reaction has been wonderfully supportive. We are genuinely surprised each day at how positive the reaction has been and continues to be. This holds for our enthusiastic staff and large contingent of volunteers; for the social enterprises with which we have begun to engage; for the impact investors we are speaking to; and for the bankers, lawyers and accountants to whom we have reached out.
CSRD: When will the exchange go live?
RK: We have not fixed a date, and we still have many issues to resolve before we can do so. However, we are aiming for a launch towards the end of 2011 or the first quarter of 2012.
CSRD: How has fund managers’ reactions been to the exchange?
RK: Based on informal conversations, we feel that there is strong investor interest in utilizing the exchange. We are currently conducting a major research study of investors’ interest in investing through and trading on a social stock exchange. This will help us to quantify the demand and segment the marketplace.
CSRD: How does a social enterprise get listed on the exchange? What is your advice to a social enterprise which wants to get listed?
RK: The listing process for a social enterprise will be similar to that of a traditional enterprise seeking to list on a traditional exchange. While we are working to ensure that the listing criteria are appropriate for early stage companies and are not too onerous to comply with, social enterprises will have to meet minimum standards of corporate governance and financial disclosure. In addition, social enterprises will be required to report on their social impact in a transparent and systematic manner. We think this will be a major factor in attracting an investor base which cares deeply about supporting the social impact of the companies they invest in.
Our not-for-profit affiliate Impact Investment Shujog (Shujog) has a mission to help social enterprises prepare to raise capital. For social enterprises seeking to prepare for listing, we think a good place to start to have Shujog prepare a market readiness assessment which can help identify actions needed to prepare for a listing.
CSRD: What is the difference between Impact Investment Exchange Asia & Indonesia’s SRI-KEHATI Index?
RK: Fundamentally, an exchange serves a different purpose than an index. An index seeks to highlight those companies which are already listed which meet certain criteria. While an exchange serves as a platform for new listings and to raise capital for companies that previously did not have access to public investment capital.
In addition, the exchange will be limited to companies that meet our criteria as social enterprises. In particular, this means that all companies listed on the Impact Exchange will have a strong social or environmental mission. By contrast, the companies included in the index are by and large traditional companies, though they are selected because they have good performance on a range of environmental, social and corporate governance indicators.
CSRD: How has the Singaporean authorities assisted in establishing the Impact Investment Exchange Asia, if at all?
RK: The Singaporean authorities have been very supportive of our efforts. IIX is working closely with various Singapore government ministries in establishing the exchange’s presence in Singapore. In particular, IIX is in continuous dialogue with the International Organisations Programme Office (IOPO) of the Economic Development Board due to IOPO’s interest in attracting international non-profit organisations in setting up base in Singapore. IIX’s innovative platform in pulling Social Enterprises and Impact Investors from all over Asia will play a pivotal role in contributing to Singapore’s position as a social enterprise hub in Asia.

Harvard's Impact Investing Group - our article in Harvard newspaper

Have Your Cake and Eat it Too?

by Atisha Kumar, MPA/ID'12 and Katharine Wolf, MPA/ID'12 on December 2, 2010 in HKS News, News

Impact Investing attracts HKS students.
For a lot of Harvard students, balancing their goals of doing good and doing well poses a professional dilemma. Many graduates wrestle with the choice of working in the public or private sector. How can they conceivably do both? Impact investing might just be the way.
Broadly speaking, impact investing involves using traditional, profit-oriented investment that seeks to achieve a social and/or environmental impact. Examples include investments in microfinance, clean technology and global health. Caroline Hoffman, MBA ’12, worked at IGNIA capital this past summer and described impact investing as an opportunity to bridge the gap between social goals and financial returns.
A fast-growing industry, impact investment is attracting diverse talent and capital. From the financial world, players such as venture capitalists, bankers and investors view this as an economic opportunity with attractive returns. Traditional non-profits are considering new revenue models and legal structures in order to attract capital and become more sustainable.
“The challenge now is to prove the business model on a large scale and establish this investment category lastingly as an effective economic development tool,” she explained.
At the Kennedy School, several students started an Impact Investing club this fall, reflecting the growing interest in the field. The club now has about 60 members, and provides a forum for its members to learn more about opportunities in impact investment. Since it’s a relatively new field, members of the club also have a chance to discuss its pros and cons and hear from people working in the industry.
“I’ve been really impressed by the range of speakers I have met - from the CEO of IGNIA to Willy Foote of Root Capital,” Linda Zou, a member of the club and a first year MPA/ID student said. “However, while I appreciate learning about the good work that is being done, I also hope to see more discussion on the controversial issues surrounding impact investing. For example, should it target the same rate of return as traditional venture capital investments?”
Is it a fad or is it here to stay?
The HKS Impact Investing club recently organized a talk by Michael McCreless, an Impact Investment Officer at a Cambridge-based social investment fund called Root Capital. McCreless, an HKS and HBS alumnus, spoke about ways to effectively measure social impact. At the same time, he raised questions about the industry’s sustainability and how he hoped to address these concerns.
“In twenty years, I don’t want this to be another idea that made sense at the time but didn’t deliver on the outsized promises that it made early on,” he said.
Given the nascent nature of the industry and the relatively small number of impact investment firms, the way in which the industry grows in the next few years and the kind of talent it attracts will be critical. Several HKS students said that their awareness of impact investing was limited before joining the club, despite their exposure to the field of development, banking or consulting. Not surprising, since the term impact investing didn’t exist until two years ago.
“Given the relatively new nature of the area, the Impact Investing club is doing a good job of initiating people’s thinking towards this field,” Prateek Singhal, MPA/ID ’12 says. “I envisage the club to take a stronger role in awareness and skill building of its members and potentially act as an informal channel of employment by connecting employers with aspirants.”
What is clear is that impact investing should not replace traditional philanthropy or government aid, but rather serve as a good complement to traditional philanthropy enabling proven business models to operate at scale while addressing some of the world’s most pressing social and environmental challenges.

Katharine Wolf and Atisha Kumar are first-year MPA/ID students. Wolf founded the Impact Investing Club.

Impact Investing

Writing about impact investing